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Financial Terms | |
Shirking |
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Definition of ShirkingShirkingThe tendency to do less work when the return is smaller. Owners may have more incentive to shirk shirkingthe process of an individual free-riding on a group effort because the individual’s share of the group reward is insufficient to compensate for his or her separate effort
Related Terms:Abandonment optionThe option of terminating an investment earlier than originally planned. Abnormal returnsPart of the return that is not due to systematic influences (market wide influences). In Absolute Right of ReturnGoods may be returned to the seller by the purchaser without restrictions. Absorption costingA method of costing in which all fixed and variable production costs are charged to products or services using an allocation base. absorption costinga cost accumulation and reporting Absorption costingA methodology under which all manufacturing costs are assigned ![]() Accelerated cost recovery system (ACRS)Schedule of depreciation rates allowed for tax purposes. Accounting rate of return (ARR)A method of investment appraisal that measures accounting rate of return (ARR)the rate of earnings obtained on the average capital investment over the life of a capital project; computed as average annual profits divided by average investment; not based on cash flow Accrued interestThe accumulated coupon interest earned but not yet paid to the seller of a bond by the Accrued InterestThe amount of interest accumulated on a debt security between Accrued InterestThe amount of interest owing but not paid. Accumulated Other Comprehensive IncomeCumulative gains or losses reported in shareholders' Act of state doctrineThis doctrine says that a nation is sovereign within its own borders and its domestic Activity-based costingA method of costing that uses cost pools to accumulate the cost of significant business activities and then assigns the costs from the cost pools to products or services based on cost drivers. ![]() activity based costing (ABC)A relatively new method advocated for the activity-based costing (ABC)a process using multiple cost drivers to predict and allocate costs to products and services; Activity-based costing (ABC)A cost allocation system that compiles costs and assigns Actual costThe actual expenditure made to acquire an asset, which includes the supplierinvoiced actual cost systema valuation method that uses actual direct After-tax real rate of returnMoney after-tax rate of return minus the inflation rate. AgencyA grouping of sales producers according to region. Compare with Branch. Agency bankA form of organization commonly used by foreign banks to enter the U.S. market. An agency Agency basisA means of compensating the broker of a program trade solely on the basis of commission Agency cost viewThe argument that specifies that the various agency costs create a complex environment in Agency costsThe incremental costs of having an agent make decisions for a principal. ![]() Agency pass-throughsMortgage pass-through securities whose principal and interest payments are Agency problemConflicts of interest among stockholders, bondholders, and managers. agency problemsConflicts of interest between the firm’s Owners and managers. Agency theoryThe analysis of principal-agent relationships, wherein one person, an agent, acts on behalf of Aggressive Cost Capitalizationcost capitalization that stretches the flexibility within generally All equity rateThe discount rate that reflects only the business risks of a project and abstracts from the All-in costTotal costs, explicit and implicit. Allowance for bad debtsAn offset to the accounts receivable balance, against which Allowance for doubtful accountsA contra account related to accounts receivable that represents the amounts that the company expects will not be collected. Allowance for Doubtful AccountsAn estimate of the uncollectible portion of accounts receivable American sharesSecurities certificates issued in the U.S. by a transfer agent acting on behalf of the foreign Amortized Costcost of a security adjusted for the amortization of any purchase premium or Amortizing interest rate swapSwap in which the principal or national amount rises (falls) as interest rates annual returnThe fund return, for any 12-month period, including changes in unit value and the reinvestment of distributions, but not taking into account sales, redemption, distribution or other optional charges or income taxes payable by any unitholder that would reduce returns. Annualized holding period returnThe annual rate of return that when compounded t times, would have appraisal costa quality control cost incurred for monitoring Arbitrage-free option-pricing modelsYield curve option-pricing models. Arithmetic average (mean) rate of returnArithmetic mean return. Arithmetic mean returnAn average of the subperiod returns, calculated by summing the subperiod returns Asset/equity ratioThe ratio of total assets to stockholder equity. attribute-based costing (ABC II)an extension of activitybased costing using cost-benefit analysis (based on increased customer utility) to choose the product attribute authorized share capitalMaximum number of shares that the company is permitted to issue, as specified in the firm’s articles of incorporation. Authorized sharesNumber of shares authorized for issuance by a firm's corporate charter. Authorized sharesThe number of shares of stock that the company is legally authorized to sell. Average accounting returnThe average project earnings after taxes and depreciation divided by the average Average-Cost Inventory MethodThe inventory cost-flow assumption that assigns the average Average cost of capitalA firm's required payout to the bondholders and to the stockholders expressed as a Average rate of return (ARR)The ratio of the average cash inflow to the amount invested. Avoidable costscosts that are identifiable with and able to be influenced by decisions made at the business backflush costinga streamlined cost accounting method that speeds up, simplifies, and reduces accounting effort in an environment that minimizes inventory balances, requires Bad debtAn account receivable that cannot be collected. Bad debtsThe amount of accounts receivable that is not expected to be collected. bad debtsRefers to accounts receivable from credit sales to customers Bankruptcy cost viewThe argument that expected indirect and direct bankruptcy costs offset the other Base interest rateRelated: Benchmark interest rate. basic earnings per share (EPS)This important ratio equals the net Batch costA cost that is incurred when a group of products or services are produced, batch-level costa cost that is caused by a group of things BellwetherA signalling device. Bellwether issuesRelated:Benchmark issues. Benchmark interest rateAlso called the base interest rate, it is the minimum interest rate investors will Benchmark issuesAlso called on-the-run or current coupon issues or bellwether issues. In the secondary Best-efforts saleA method of securities distribution/ underwriting in which the securities firm agrees to sell Best-interests-of-creditors testThe requirement that a claim holder voting against a plan of reorganization Blue-chip companyLarge and creditworthy company. book rate of returnAccounting income divided by book value. Book ReturnsBook yield is the investment income earned in a year on a portfolio of assets purchased over a number of years and at different interest rates, divided by the book value of those assets. book value and book value per shareGenerally speaking, these terms Book value per shareThe ratio of stockholder equity to the average number of common shares. Book value Book Value per ShareThe book value of a company divided by the number of shares Bottom-up equity management styleA management style that de-emphasizes the significance of economic budgeted costa planned expenditure Builder buydown loanA mortgage loan on newly developed property that the builder subsidizes during the Bulldog bondForeign bond issue made in London. Bulldog marketThe foreign market in the United Kingdom. business process reengineering (BPR)the process of combining information technology to create new and more effective BuydownsMortgages in which monthly payments consist of principal and interest, with portions of these Capital Cost Allowance (CCA)The annual depreciation expense allowed by the Canadian Income Tax Act. capitalization of costswhen a cost is recorded originally as an increase Capitalized Cost An expenditure or accrual that is reported as an asset to be amortized againstfuture-period revenue. Capitalized interestinterest that is not immediately expensed, but rather is considered as an asset and is then Capitalized Interestinterest incurred during the construction period on monies invested in Carring costscosts that increase with increases in the level of investment in current assets. carrying costthe total variable cost of carrying one unit of Carrying costThe cost of holding inventory, which can include insurance, carrying costscosts of maintaining current assets, including opportunity cost of capital. CARs (cumulative abnormal returns)a measure used in academic finance articles to measure the excess returns an investor would have received over a particular time period if he or she were invested in a particular stock. Cash costThe amount of cash expended. Cash flow after interest and taxesNet income plus depreciation. Cash flow per common shareCash flow from operations minus preferred stock dividends, divided by the Cheapest to deliver issueThe acceptable Treasury security with the highest implied repo rate; the rate that a Cherry PickingSelecting specific assets for sale so as to record desired gains or losses. Collective wisdomThe combination of all of the individual opinions about a stock's or security's value. committed costa cost related either to the long-term investment Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |